March 26, 2014

Google Slashes Pricing On Its Cloud Services

Google reduced the prices for its Cloud Services on Tuesday. The new prices for on-demand and pay-as-you-go cloud computing services follow recently lowered pricing on cloud storage service Google Drive, which the company announced a week ago.

Cloud computing services prices went down by 30 to 85 percent, MarketWatch's Benjamin Pimentel reports. The new prices were announced at Google's cloud platform event that took place this week, with the Internet search giant touting "lower and simpler pricing" for its offering.

Google reduced prices for its Compute Engine service by 32 percent. The price cut will occur "across all sizes, regions and classes." On-demand prices for Google BigQuery went down by 85 percent.

The App Engine service from Google will get a few tweaks. "The company also said the pricing for its App Engine pricing will be 'simplified, with significant reductions in database operations and front-end compute instances,'" MarketWatch's Pimentel wrote, citing Google sources.

While Google takes the lead on many Internet offerings, the company realizes that it is playing catch-up in the enterprise cloud platform business, and that Google still has further development to fully address the market. Google is competing in the market with contenders such as Rackspace, IBM, and Amazon Web Services.

The cloud computing presentation, and price adjustments, were timed in-between two competing events and announcements this week, ZDNet reports. On Monday Cisco Systems announced plans to invest $1 billion to build a global Intercloud, or network of clouds, with partner companies. On Wednesday Amazon plans to host sales and customer summits. Google is under pressure to show its leadership in the cloud computing space.

"Furthermore, Google is finally doing what it does when it signs new, high-profile corporations for Google Apps by flaunting some of its familiar clients on Cloud Platform. This was demonstrated on Tuesday by the appearance of Bobby Murphy, co-founder and chief technology officer of Snapchat," ZDNet's Rachel King wrote.

Lowering the cost for cloud computing services mimics hardware and follows Moore's Law, Hölzle noted in his address, according to ZDNet. Adjustments on other services are likely to follow.

"Cloud Storage follows suit with up to 68 percent in price reductions, trailed by the Compute Engine fees lowered by up to 32 percent across all regions, classes, and sizes," King wrote. "Google is also promising further savings via its new Sustained-Use Discounts for on-demand virtual machines and workloads. With potential savings of up to 53 percent compared to previous rates, this promo rewards customers who use a VM for more than a quarter of each month."

The model of Moore's Law might signal a trend in pricing adjustments across services, as well as companies. Ars Technica reports that pricing hasn't followed Moore's Law -- which is an increase in power output -- as the market demands grow.

"In today's announcement, unveiled at Google's Cloud Platform Live event, the company said, 'We think cloud pricing should track Moore’s Law, so we’re simplifying and reducing prices for our various on-demand, pay-as-you-go services by 30-85 percent.' Moore's Law is the observation that the number of transistors on integrated circuits doubles about every two years, bringing steady increases in processing power," Ars technica's Jon Brodkin wrote.